05/10/11

By Gary Turner, MD, Xero UK Ltd

In the last century, small businesses were rarely targeted to be at the front of the queue when new technology was being handed out. The big technology vendors were more interested in plundering the pockets of big customers first, the ones that were going to sign up for thousands of products or software licenses. Of course, the latest developments eventually filtered down to the much smaller organisations, such as the one man bands, but only when each area of innovation had begun to mature.

Today, we’re seeing the reverse happen. And while that in itself is good news, the implications go far beyond micro businesses finally getting first dibs on the cool stuff. For the first time, small businesses — let’s take an approximate definition of 1-50 employees - not only have the same access to new technology as the big boys, they are also able to embrace and react to it more quickly, nimbly and cost-effectively. The net effect is that small businesses are, in many instances, in poll position to steal a march on the bigger firms.

Let’s put some perspective in this: the calibre of software innovation we are seeing today is akin to the transformation and modernisation of industrial manufacturing — such as computerised manufacturing lines using robotics - that we saw in the Seventies and Eighties. Imagine if back in those days, a five-person manufacturing business could have afforded to spend millions on expensive production facilities to compete on a level playing field with huge manufacturers.

This is the scale we are talking about and the tipping point is proving to be cloud computing, which is disrupting the technology industry status quo, with its ability to provide ‘anywhere, anyhow’ remote access to powerful applications and storage. For small businesses, the explosion of cloud-based business services means that they have access to a vast array of choices, giving them access to the kind of functionality previously only found in large corporate environments, yet involving minimal commitment and up-front cost.

While a large organisation’s IT director might appreciate the benefits of cloud, turning around the juggernaut of most investments in IT infrastructure means that it is not an easy option. Even mid-sized businesses — those typically with a few hundred employees — are vulnerable, because they are not in a position to throw vast amounts of money at changing IT strategy, particularly in today’s straitened economic conditions.

Conversely, a micro business can make the decision to switch immediately and since most cloud-based services are subscription-based with minimal commitment, they can actually save money by jumping to new technology.

Cloud-based online accounting — which is the business Xero is in — is just one example. Why pay for expensive servers when you can have the same or better functionality for a monthly subscription, no contract, no upfront investment and with the benefits of continually updated, secure service? We are one of several online accounting providers taking business away from the old school vendors such as Sage.

Add to this the fact that cloud is perfectly complemented by mobile apps, and suddenly anyone who has access to an iPhone, iPad or Google device can pretty much run their business from their briefcase, handbag or back-pocket. You can issue invoices, check payments in, chase up debtors, even have a collaborative debate with your accountant, wherever and whenever you have online access, which is ideal for small business owners, who in many cases, are not based in an office all day.

This isn’t hyperbole: we know of numerous small businesses, typically smart one man or one woman outfits, doing just this. For instance, Chris Hawes the proprietor of Bristol-based web solutions company auxillio.com uses Xero Touch — the mobile application version of the software - to manage his finances while he’s out of the office. “Using Xero Touch to issue invoices in the moment means I am managing my cash flow more efficiently, because invoices are issued as soon as a job is finished, rather than being left to the end of the month. I’m not having to spend my down-time dealing with my accounts, so it adds to my quality of life. The ability to issue invoices promptly also adds to my ‘brand’ because it makes auxillio.com look like a more professional company.”

It is this combination of being able to have access to technology features previously only the preserve of bigger organisations, plus the levelling of the business playing field, which means that small businesses are the real winners in today’s fast-changing technology scene.